Elizabethtown Estate Planning Attorney: Wills and Trusts Lawyer
Through estate planning, you determine how you want to divide up your assets after your death. You can also decide other important issues, including the medical procedures you’ll receive if you become incapacitated. As every state has small (but significant) differences in its laws, it is critical that you are well-versed in the basics of Kentucky estate law.
Do you need a Wills and Trusts Lawyer?
Honestly, it depends. If you have a spouse, children, stepchildren, or grandchildren, the answer is overwhelmingly, “yes!” Without a will, you will have no voice from the grave as to what your desires are concerning your estate. Many people say “well my spouse knows my wishes” but unfortunately, it’s not as easy as that. If you do not have a will, you open the door for complicated probate lawsuits from individuals who may feel that you wanted your estate, or part of it, to transfer to them. The worst part about this is if you have passed, you will not have a way to make your intentions clear.
If you pass without a will, the State will determine what happens with your estate in a process called “intestacy.”
What Happens If I do not have a Will When I die?
Intestacy is the legal term for passing without a will. In Kentucky, it means that Kentucky laws determine the division of your assets. In addition, if you have any minor children, the courts will decide their guardian.
The risk of going into intestacy is that these decisions may not align with your wishes and could mean that your spouse and children receive insufficient support. Plus, your estate could end up owing more than would otherwise be the case in state and federal taxes.
Understanding Kentucky Inheritance Laws
Kentucky is one of the few states to continue implementing dower and curtesy laws. Also, the Bluegrass state remains only one of five states that levy an inheritance tax. Let me explain just a bit about the Kentucky inheritance tax laws. The state has no actual estate tax.
Does the Kentucky Inheritance Tax Affect Everyone?
Not all heirs in the state of Kentucky face paying an inheritance tax or estate tax. It depends on their relationship with the deceased individual which helps determine what ‘class’ they fall into.
Classes of the tax:
- Class A: The spouse, children, siblings, or grandchildren are part of Class A which makes them completely exempt from paying any inheritance taxes.
- Class B: Great-grandchildren, aunts, uncles, nephews, and nieces are in the Class B category. They have an exemption of up to $1,000 followed by rates of 4 to 16 percent.
- Class C: The Class C group is made up of friends, cousins, organizations, and others who do not fit in the Classes A and B. They are exempt up to $500 and will then face a rate of 6 to 16 percent.
Inheritance Tax Rules
Only residents and non-residents who own Kentucky property pay inheritance tax. The tax must be filed within 18 months following the individual’s death. It is a benefit to file early because you are given nine months to pay off the entire amount to receive the five percent discount. You can also file for a payment plan to make monthly installment payments until the loan is paid off. Anyone who files a late inheritance tax will face a late penalty. In some instances, an installment plan is also a useful benefit if you qualify.
Additional Filing Requirements
Taking care of the Kentucky inheritance tax is the first step of the process. In addition, you’ll need to manage other taxes that are needed for the distribution of any estate.
- Individual state and federal income tax returns are due by the Tax Day of the following year after the person’s death.
- Federal estate/trust income tax return is due by April the year following the person’s death.
- Federal estate tax return – File within nine months after the individual’s death. However, a six-month extension filed before the end of the nine months remains an option. This tax return is only required if the gross asset and taxable fit value is more than $11.4 million.
Employer Identification Number
Sometimes, depending on the estate, your executor may need to file for an employer identification number with the IRS. The number is considered the social security number for the estate. You can obtain an application online, mail or tax.
A Will in Kentucky
Always create a valid estate will under the Kentucky inheritance tax law. You’ll need to sign your will and have at least two signatures of witnesses who viewed you signing the document. However, if you cannot physically sign your will then you can have someone do it. An executor should be chosen that will manage the expenses, debts, and distribution of the estate.
What Makes a Will Invalid in Kentucky?
A will is invalid if the person creating it is younger than 18 years old or not “of sound mind.” Let’s unpack what each of those mean.
If you’re under 18 and want to create a will, you’ll need to be granted power. This can happen if, for instance, you’re a married minor. In addition, parents under 18 are able to appoint guardians for their children.
“Of sound mind” means that the individual must understand he is making a will, know how much property he owns, and be aware of what relatives would normally share his estate.
In addition, nuncupative wills are unrecognized in Kentucky. These are oral wills communicated to witnesses during sickness or before death.
Can I Write My Own Will in Kentucky?
Whereas you can write your own will without the assistance of an attorney, this is risky — no matter if you do it by hand or type the will.
A handwritten will is called a holographic will. To be valid, you need to write the whole thing yourself, meaning this option is ruled out for joint wills. With a holographic will, there’s no need to have witnesses — although someone familiar with your handwriting will need to testify.
Another option is to prepare the will yourself and type it. In this case, you’ll need to receive two signatures. The main risks are that the will can be invalid if it’s worded incorrectly. For instance, it could be unclear in places, have typos, or show a lack of understanding of the law.
Assets to Include in Your Will
Although you can include many things in your will, most people choose to stick with the basics. This often consists of cash, stocks, bonds, intellectual property, and, of course, real property like buildings and land.
Bear in mind that you may already have a beneficiary for some of your other assets. This includes insurance policies and pension funds. Writing a will is a good time to check who you’ve named as a beneficiary of these. You can do this by contacting your insurance company and pension representative. It’s not uncommon to forget to update details after the original beneficiary dies or after a divorce, but it’s crucial to keep beneficiaries up to date to make sure your assets go to the right person.
Also leave out of your will any property and assets that are in a trust. You’re unable to designate a beneficiary for the trust through a will — you do this in a trust document. However, if the trust will terminate upon your death, you should mention the trust in your will and specify how you want it handled.
What Is a Living Will?
You create a living will using much the same process as for a standard will. It states your wishes for the eventuality that you are unable to communicate your preferences for medical treatment. This allows you to include the desire to withhold the intervention to sustain life, although a living will does not cover treatment for pain. Typically, you’ll need to name a healthcare power of attorney who will speak on your behalf.
Revoking a Will
You can revoke both traditional and living wills in several ways.
Your first option is to create a subsequent will. This will nullify the original.
The second option is to write a declaration that you intend to revoke your will. You’ll need to sign and date this document.
Finally, you can destroy the will physically — burn it, cut it, or tear it to either destroy the entire document or just the signature.
Changing a Will
Sometimes, there’s no need to revoke your will; you can just change your current one. You’ll want to do this on a regular basis, particularly after major life events like the birth of a child or grandchild, marriage, divorce, or a move to another state. You should also add any new assets you acquire and make adaptations if relevant state or federal laws change.
Talking with an attorney will help you decide if it would be better to amend your will through a codicil or revoke it and create a new one. Your attorney can also advise you on how to make the changes you want.
What Do We Mean By Probate?
Probate proves that your will is legal and valid. The procedure also involves collecting property, paying debts, and distributing property as specified in your will.
Kentucky Probate Process
The probate court will process the situation to ensure there is no fraud. If someone passes intestate, the succession laws of Kentucky will start.
- Formal Settlement: This is expensive and considered the highest level of observation.
- Informal Settlement: A certain level of oversight is maintained with informal probate.
- Small Estate: Estates that are under $15,000 in personal property require no probate if a small estate affidavit is filed. Also, this does not include any estate that has real property.
Are There Ways to Avoid Probate Court and Make It Easier for My Heirs?
Yes! Through documents such as living trusts, and adding beneficiaries to various accounts such as bank accounts, and retirement accounts, it is possible to have the bulk of your assets completely avoid probate. This is why it is important to meet with an attorney and create an estate plan. It’s not about just creating a will, although that is a great starting point for many individuals. An estate plan is just that, a plan. At The Fleck Firm we will create a plan with goals to get your assets to your beneficiaries fast, easy, and legal upon your passing.
Living Trust vs Will
A will is essential, but you may like to have a living trust as well — it depends on your situation. For example, if you have high-value assets and are worried about your heirs’ ability to manage money, a trust will put your mind at ease.
In general terms, a living trust will achieve much the same as a will: it will distribute your assets among your heirs in the way you choose. The main difference is that a will gives heirs a lump sum, whereas a trust distributes assets on the terms you set. This could involve inheritors receiving a certain amount every month or year. You’ll also need to designate someone to administer the trust after your death.
What’s the Next Step?
If you have any questions about Kentucky inheritance laws, need a will or estate plan, or help with probate, please contact The Fleck Firm today at (270) 446-7000. We can assist in building wills with simple trusts and complex trusts to help care for children and/or individuals with special needs.